Boohoo continues to perform in 2023 up over 57% from its lows.

Overview

The Boohoo group is an impressive collection of 13 top British fashion businesses that aim to make stylish apparel accessible to all people. Some of the subsidiaries include Boohoo, BoohooMAN, PrettyLittleThing, Debenhams, Dorothy Perkins, Burton, Nasty Gal and more. Boohoo has given the UK economy nearly £2 billion in GVA since 2009 by locating its headquarters here, procuring large quantities of goods locally, and housing four distribution centres there to serve their international consumer base. Additionally, Boohoo alone spent more than £300 million with British companies in 2020–21, supporting almost 5000 employees.

Financials

Interim results for the six months ended 31 August 2022. Despite weaker-than-expected consumer demand, gross revenue before returns increased by 4%, demonstrating underlying growth and continuous improvements in average purchase frequency and expenditure per customer. As previously guided return rates increased substantially year-over-year and UK revenues declined 4%, they softened through Q2 as inflationary pressures grew and consumer demand appeared to have been impacted by the cost-of-living crisis. As a result, net revenue decreased by 10% in the first half of the year, which was ahead of pre-pandemic levels. Due to rising incoming goods, the gross margin of 52.5% met expectations. Additionally, due to a more rigorous inventory management, gross margin performance increased compared to the second half of the previous financial year. Furthermore, a weaker-than-expected consumer demand, high-cost inflation from the macroeconomic environment, and freight and logistics inflation all had an influence on the adjusted EBITDA, which came in at £35.5 million with a margin of 4.0%. Having gross cash of £315 million at period end, selected investment programmes have significant liquidity headroom.

Technicals

From a technical perspective, Boohoo’s shares are currently trading at 54p a share. We can see that its price has been in an uptrend (bullish) since 29^th of December 2022. On the daily timeframe, now approaching a key resistance point at 55p followed by 56p. A break above the 56p resistance point could see the price edge higher towards 60-65p a share. The support is established below along the trendline and the moving averages. Support lies at 51p (along the trendline), followed by support levels between 43-45p (moving averages). A break and close below the moving averages may see the stock lose its recent gains and see a continuation of this long-term downfall. Looking at the indicators, MACD has just turned positive and RSI is already positive as it reads 64.